Carter Newell Lawyers
31
CONTRACTWORKS ANDCONSTRUCTION LIABILITY INSURANCE IN AUSTRALIA
In the case before him, his Honour considered that the vendor-purchaser
relationship between the plaintiff and the defendant was so essentially
different from that of head contractor and subcontractors in the three cases
that it was not appropriate to treat the property and liability distinction as
being subjugated to a higher principle or qualification of the kind spelt out
most positively by the Supreme Court of Canada and justified on what were
essentially policy grounds.
86
The impact of the
Insurance Contracts Act 1984
(Cth)
Since the position in Australia appears to be that a subcontractor under
a head contractor’s (or principal’s) contract works policy has an insurable
interest in the whole of the works insured by that policy (subject to words
of severance), ss 16–17 of the
Insurance Contracts Act 1984
(Cth) (which
alter the law of insurable interest for the insured under a contract of
general insurance) would not appear to be of any great import. However,
as has been noted above, contracts of general insurance may, in certain
circumstances, benefit persons who are not parties to the contract of
insurance. This entitlement of a person other than an insured can arise
either according to the authority of the High Court in
Trident
87
or pursuant to
s 48 of the
Insurance Contracts Act 1984
(Cth). Such a person is not one of
‘the insured’ for the purposes of ss 16–17 of that Act.
The decision in
Trident
will have application to contracts of liability and it
would seem property insurance entered into after the coming into force of
the
Insurance Contracts Act
.
Section 48 of the
Insurance Contracts Act 1984
(Cth) abrogates the doctrine
of privity of contract in respect of contracts of insurance coming within the
ambit of the Act, and it was recognised in
Trident
that, had the contract of
insurance been made after the Act had come into force, McNiece would
have had a statutory right to sue on the contract.
Section 48(1) provides a person who is not a party to a contract of general
insurance with a right of recovery if that person is appropriately specified or
referred to in the contract as a party to whom its benefit extends. Therefore,
in considering the application of s 48, it is necessary to determine whether
or not the person in question is a party to the contract.
86
Ibid 76,959.
87
(1988) 165 CLR 107.
